Ring-fencing customer prepayments: segregation hygiene, not protection

When a traveller pays you before they travel, that money has a particular character. In many markets it is treated as regulated consumer prepayment, money the customer has handed over for a service still to come, and there is a strong case for holding it separately from the cash you run the business on day to day. Doing so is good cash discipline, and in some arrangements separation also forms part of how customer money is looked after.

This guide is about that separation as a matter of hygiene: keeping customer prepayments visibly apart from operating funds so you do not accidentally spend money you have not yet earned. It is important to be clear up front about what that does and does not achieve. Segregating money in a business account is an organisational discipline. It is not, by itself, statutory consumer-money protection, and the two should not be confused. Where formal protection is required, that is a separate matter you must arrange yourself, and you should take your own legal and compliance advice.

Why co-mingling is a risk

The simplest mistake is to let customer prepayments flow into the same balance you pay rent, salaries and marketing from. Once the money is mixed, you lose the ability to tell, at a glance, how much of your balance belongs to trips not yet delivered and how much is genuinely yours to use. A healthy-looking account can be almost entirely other people's prepaid money.

Co-mingling makes it dangerously easy to spend customer money on running costs without ever deciding to, simply because it is all in one pile. When supplier bills and refunds later fall due, the cash you assumed was there has quietly been consumed. Keeping prepayments separate removes that ambiguity: you can see what is committed to future travel and what is free, and you are far less likely to lean on money that was never available.

Segregation is hygiene, not statutory protection

This is the part to read carefully. Holding customer prepayments in a separate balance is a money-segregation discipline. It helps you avoid spending what you have not earned, and it gives you a clear view of your real position. What it does not do, on its own, is provide statutory protection of customers' money.

In many markets, statutory consumer-money protection for package travel, the kind that returns customers' money or repatriates them if an operator fails, requires something specific: an authorised protection scheme, a bond, or an independent trustee arrangement holding the money on defined terms. That is a regulated, legal structure, and it sits outside the scope of an ordinary business account. Simply keeping money in a separate pot of your own does not create it. If your business is required to protect customer prepayments, you must arrange that separately through the appropriate authorised scheme or trustee, and take your own legal and compliance advice on what applies to you.

What good segregation looks like

Treated as hygiene, good segregation is practical. Customer prepayments go into a balance kept distinct from your operating cash, so the two are never confused. You can see how much you are holding against future travel separately from your working capital, and you draw against operating funds for running costs while leaving the prepayment balance to do its job of waiting until the trip is delivered or refunded.

If you trade under several brands or run distinct entities, separation can be organised per brand or entity, so each one's customer money and operating cash are kept apart from the others. This keeps your records clean and your view of each business clear. None of this is a substitute for statutory protection where that is required; it is simply sound internal discipline, the housekeeping that keeps you from accidentally spending money that was never yours to spend.

Keeping discipline across currencies

If you collect from travellers in more than one currency, segregation discipline extends to currency too. Customer money paid in euros is, in substance, a euro liability you may have to refund or apply against euro-denominated supplier costs. Holding it in that currency, rather than converting it into a home currency and back, keeps the prepayment balance matched to what it is actually committed to.

That matching is part of seeing your position honestly. A prepayment balance spread across the currencies it was collected in tells you what you owe in each, without an FX guess sitting in the middle. As with everything in this guide, this is about organising your own money clearly. It is not a protection arrangement, and it does not change the need to put any required statutory protection in place separately.

How Altery fits

Keeping customer prepayments visibly separate from operating cash is the discipline Altery supports. You can use ring-fenced pots to separate customer prepayments from your operating balances, so the two are never confused and you can always tell what is committed to future travel and what is genuinely free to spend. Real-time balances per pot let you see each one at a glance, and multi-currency accounts hold USD, EUR and GBP so a prepayment balance can stay matched to the currency it was collected in. Where you trade under several brands, multi-entity management lets you keep each one's customer money and operating cash apart.

It is important to be precise about what these are. They are organisational tools for money-segregation hygiene: they help you keep customer prepayments separate and visible. They are not statutory consumer-money protection, a bond, insurance, a statutory guarantee over deposits, or a regulated trust facility, and Altery does not provide any of those. Statutory protection of package-travel customer money requires an authorised scheme or an independent trustee and sits outside an ordinary business account; you must arrange any such protection separately and take your own legal and compliance advice. Altery is not a bank, and this is general information, not legal or compliance advice. You can see the broader picture at /business/account/travel/.

Frequently asked questions